Investors Still Wary of Spain

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This topic contains 22 replies, has 10 voices, and was last updated by Profile photo of Anonymous Anonymous 6 years, 12 months ago.

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  • #55332
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    Anonymous
    Participant

    Talking to residential investors in Europe these days, Spain is almost never mentioned as a target. Even groups with vulture funds say they’re not quite ready to dive into that market, despite prices down 20 to 40 percent, in many areas.

    read the rest of the article:
    http://www.internationalpropertyjournal.com/blog/2009/12/07/45-investors-still-wary-of-spain.html

  • #95479
    Profile photo of logan
    logan
    Participant

    That article describes many of the discussions already aired on this forum and contributes nothing new.
    The market in Spain has indeed a long way to go. Down and down that is. Even prices down 40pc does not represent anything since 40pc off a pumped up price is meaningless. How far down it will go is now the only relevant. question.

  • #95481
    Profile photo of petej
    petej
    Participant

    As someone who has recently purchased in Spain I would say investment was the last thing on my mind

    I wanted a holiday home pure and simple, I chose Spain due to the climate/ease of access and did not need to borrow money or require rental income, if I needed either of these I would not have purchased

  • #95482
    Profile photo of logan
    logan
    Participant

    @petej wrote:

    As someone who has recently purchased in Spain I would say investment was the last thing on my mind

    I wanted a holiday home pure and simple, I chose Spain due to the climate/ease of access and did not need to borrow money or require rental income, if I needed either of these I would not have purchased

    Well I trust you added up just how much your ‘holidays’ are likely to cost you in real terms.
    ie: Loss of return on capital, property value depreciation, taxes on purchase and selling, maintenance, community charges. To name but five.

  • #95483
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    petej
    Participant

    @logan wrote:

    @petej wrote:
    As someone who has recently purchased in Spain I would say investment was the last thing on my mind

    I wanted a holiday home pure and simple, I chose Spain due to the climate/ease of access and did not need to borrow money or require rental income, if I needed either of these I would not have purchased

    Well I trust you added up just how much your ‘holidays’ are likely to cost you in real terms.
    ie: Loss of return on capital, property value depreciation, taxes on purchase and selling, maintenance, community charges. To name but five.

    Yes all taken into account, money is not my concern when it comes to a holiday home, enjoyment of life is the main thing and the winter sun has a high value for me

    I have a love of motorcycles and for me that winter period that my riding can continue has no price, after all we are not here for ever!

  • #95484
    Profile photo of logan
    logan
    Participant

    It’s interesting to me that some people will put lifestyle issues ahead of financial considerations. Those that is who find themselves in that happy position.
    When looking at Spain and the property markets perhaps it is those same lifestyle issues which will eventually fuel demand and help the market to turn. However that assumes that mass market consumers will be able to choose lifestyle over finance.
    Therein lies one of the current problems when considering investment in Spain. Consumers in Europe are struggling because of the down turn. That is likely to last another 3- 4 years in my best guesstimate. The damage that has effected confidence among consumers is considerable. The hangover will probably take 5 years before recovery begins. Far too long for investors or banks to hold a falling portfolio.
    Soon the property auctions will begin when banks are no longer willing or able to hold massive stocks of repo property. Property values will then fall off a cliff, stay rock bottom until the lifestyle consumer returns.

  • #95485
    Profile photo of Anonymous
    Anonymous
    Participant

    logan

    yes I think that’s the way it could well go regarding prices. I’m sure what will always be Spain’s saviour will be the weather and it’s geographical location. That can’t be taken away despite everything else. As for the recovery though, not even on the horizon yet, and could well get far worse?

    Being a biker I can sympathise with petej to a point, and as he says we’re not here for ever, …..and we might not be here in 5 years?. If money loss is not an issue then I guess it’s a different ball game to most of us?

  • #95489
    Profile photo of petej
    petej
    Participant

    @logan wrote:

    It’s interesting to me that some people will put lifestyle issues ahead of financial considerations. Those that is who find themselves in that happy position.
    When looking at Spain and the property markets perhaps it is those same lifestyle issues which will eventually fuel demand and help the market to turn. However that assumes that mass market consumers will be able to choose lifestyle over finance.
    Therein lies one of the current problems when considering investment in Spain. Consumers in Europe are struggling because of the down turn. That is likely to last another 3- 4 years in my best guesstimate. The damage that has effected confidence among consumers is considerable. The hangover will probably take 5 years before recovery begins. Far too long for investors or banks to hold a falling portfolio.
    Soon the property auctions will begin when banks are no longer willing or able to hold massive stocks of repo property. Property values will then fall off a cliff, stay rock bottom until the lifestyle consumer returns.

    Logan
    I would agree with you 100%,

    I realise I am in a fortunate position and though there will be others like me around at the moment looking at Spain there will certainly not be anything like enough to fuel a market.

    I am in my mid 40s, if I were 10 even 5 years younger I would not be buying holiday homes anywhere but for me I think now is the a good time, as goodstich44 has said we may not be here in 5 years

  • #95490
    Profile photo of Anonymous
    Anonymous
    Participant

    The problem is you don’t get much return on your money if you invest in a Building Society. In Oct 2008 we managed to get 6% (this is in Gibraltar) just before the interest rates were slashed. Now we are only getting 2.85% 🙁

    We have decided to buy a holiday home inland. In the town where we are looking, you can get a 2 bed renovated townhouse for between 75,000 -90,000 euros which I think is very reasonable. I wouldn’t expect the prices there to drop any more. People are buying there and in fact around six of the houses we have looked at since the summer have been sold. One was only on the market for about 3 weeks.

  • #95492
    Profile photo of angie
    angie
    Spectator

    Logan, your analysis of the Spanish property market is IMO absolutely spot on. I really believe it will fall further, yes the prices were, and still are pumped up (for mainly bog standard build), and it most definitely is not a safe (too many illegal builds) or good financial investment. 😉

  • #95497
    Profile photo of Anonymous
    Anonymous
    Participant

    @petej wrote:

    Yes all taken into account, money is not my concern when it comes to a holiday home, enjoyment of life is the main thing and the winter sun has a high value for me

    I have a love of motorcycles and for me that winter period that my riding can continue has no price, after all we are not here for ever!

    Petej, for most people money is the greatest concern when dealing with luxuries. And buying a holiday home is the biggest luxury of them all.

    Winter sun and winter motorcycling can be had for at most 1/2 of the cost by renting 4-5 months during the winter instead of buying (the rentals are almost for free during the winter months, people seem to be just happy to have somebody live in their apartment for that period).

  • #95501
    Profile photo of logan
    logan
    Participant

    We have decided to buy a holiday home inland. In the town where we are looking, you can get a 2 bed renovated townhouse for between 75,000 -90,000 euros which I think is very reasonable. I wouldn’t expect the prices there to drop any more. People are buying there and in fact around six of the houses we have looked at since the summer have been sold. One was only on the market for about 3 weeks.[/quote]

    If I were you I would keep my money safe earning those small amounts. Do not confuse other peoples actions as a reflection of market upturn. It is nothing of the sort.
    Standard and Poor’s has just today downgraded the Spanish economy to ‘negative’ status. Which means the negative processes in the economy are very serious for the future.
    Buying a property now is like likely to cost you a great deal more than the purchase price and a lot more than the small return on capital available from your bank.[/b]

  • #95503
    Profile photo of Anonymous
    Anonymous
    Participant

    @logan wrote:

    Well I trust you added up just how much your ‘holidays’ are likely to cost you in real terms.
    ie: Loss of return on capital, property value depreciation, taxes on purchase and selling, maintenance, community charges. To name but five.

    logan, much as I believe you give sound advice to an investor, someone considering buying Spanish property with a view to rental or selling at a later profit, it doesn’t apply to all.

    If Petej was considering paying cash for a gleaming new motorbike, at a discount, rather than a holiday home, I’d hazard you wouldn’t be warning him about likely second-hand values, depreciation, road tax, petrol costs and maintenance.

    You’d be saying ‘good on you mate, go for it’. 😀

  • #95504
    Profile photo of petej
    petej
    Participant

    @flosmichael wrote:

    @petej wrote:
    Yes all taken into account, money is not my concern when it comes to a holiday home, enjoyment of life is the main thing and the winter sun has a high value for me

    I have a love of motorcycles and for me that winter period that my riding can continue has no price, after all we are not here for ever!

    Petej, for most people money is the greatest concern when dealing with luxuries. And buying a holiday home is the biggest luxury of them all.

    Winter sun and winter motorcycling can be had for at most 1/2 of the cost by renting 4-5 months during the winter instead of buying (the rentals are almost for free during the winter months, people seem to be just happy to have somebody live in their apartment for that period).

    Flosmichael, yes fully agree that a Holiday home is probably the biggest luxury anyone would buy and money is the greatest importance, I was only speaking for myself in that for me this was not a concern when asked by logan if I had taken all the expenses into account.

    Renting did go through my mind but not for long, wanted somewhere I could call home, keep my bikes, belongings etc

  • #95538
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    Anonymous
    Participant

    @petej wrote:

    @flosmichael wrote:
    @petej wrote:
    Yes all taken into account, money is not my concern when it comes to a holiday home, enjoyment of life is the main thing and the winter sun has a high value for me

    I have a love of motorcycles and for me that winter period that my riding can continue has no price, after all we are not here for ever!

    Petej, for most people money is the greatest concern when dealing with luxuries. And buying a holiday home is the biggest luxury of them all.

    Winter sun and winter motorcycling can be had for at most 1/2 of the cost by renting 4-5 months during the winter instead of buying (the rentals are almost for free during the winter months, people seem to be just happy to have somebody live in their apartment for that period).

    Flosmichael, yes fully agree that a Holiday home is probably the biggest luxury anyone would buy and money is the greatest importance, I was only speaking for myself in that for me this was not a concern when asked by logan if I had taken all the expenses into account.

    Renting did go through my mind but not for long, wanted somewhere I could call home, keep my bikes, belongings etc

    Petej, I definitely agree with you that buying is then a very good choice for you.
    If you have the money and want the luxury, then why not.

    But this thread was about investors refusing to buy Spanish property…

  • #95539
    Profile photo of logan
    logan
    Participant

    [/quote]
    but this thread was about investors refusing to buy Spanish property…[/quote]

    Quite so Flosmichael. Investors don’t make emotional judgements. Why would investors be encouraged by statements like this. What planet is Zapatero on?

    http://www.ft.com/cms/s/0/1dd6d848-e4df-11de-817b-00144feab49a.html?nclick_check=1

  • #95544
    Profile photo of petej
    petej
    Participant

    @flosmichael wrote:

    @flosmichael wrote:

    Petej, I definitely agree with you that buying is then a very good choice for you.
    If you have the money and want the luxury, then why not.

    But this thread was about investors refusing to buy Spanish property…

    Yes point taken, I was merely trying to point out that investment is not the only reason that people will purchase in Spain

  • #95550
    Profile photo of Anonymous
    Anonymous
    Participant

    @flosmichael wrote:

    And buying a holiday home is the biggest luxury of them all.

    Not for all.

  • #95551
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    Anonymous
    Participant

    @logan wrote:

    It’s interesting to me that some people will put lifestyle issues ahead of financial considerations. Those that is who find themselves in that happy position.

    But are unlikely to pay for some of the junk construction which has gone on in recent years.

  • #95553
    Profile photo of Anonymous
    Anonymous
    Participant

    Investors don’t like to be treated as fools. Many had their fingers burned – buying something that was legal one minute, then made illegal after purchase. Many are left having to pay taxes on properties despite their new ‘illegal’ status, and to add insult to injury – no electricity and water connections.

    Until Spain begins to treat people with respect, sorts out the illegal properties, gives water and electricity to those houses with none, and honours the paperwork/building licences that they themselves gave (before they decided to revoke it), Spain – in my book – does not deserve to have a single penny invested in their country.

    Their arrogance in the above, as well as the land grab situation coupled now with asking people to pay to legalise their properties, beggars belief. If I was an investor, I wouldn’t touch Spain with a bargepole because to put it simply – their legal documents (building licences, bank gurarantees, contracts) cannot be trusted.

  • #95564
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    Anonymous
    Participant

    charlie

    I think that view is being taken by more and more people, however many still won’t accept it?. There still seems to be much denial going on about the current situation and the causes. Mostly based on desperation I think from those who feel they would benefit from ”positive” thinking that might just turn in to reality. I just wish people would cut the crap, face reality and stand together in large enough numbers to be noticed!

  • #95566
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    Anonymous
    Participant

    I think what rubs salt into the wounds is that much of the infrastructure in Spain is EU funded in part ot full.

  • #95567
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    Anonymous
    Participant

    @charlie wrote:

    Spain – in my book – does not deserve to have a single penny invested in their country.

    But still they fly out to buy their dream or thei ‘money making’ property for renting. So those developers who survive are in no rush to change and those who go to the wall will trade again under a new guise.
    Like it or not, there are many who will never listen and obviously many who will never learn, even when they read of the problems, such as some on here have experienced.
    When people offer advice based on their own bitter experience and financial losses, they must feel like they are urinating into the wind.

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